Economists urged the central bank to announce guidelines on ways to tackle soaring Non-Performing Loans (NPLs) and easy terms for Small and Medium Enterprises(SME) loans in the upcoming monetary policy for the second-half (H2) of FY2018-19.
They also said the policy should focus on how to boost private sector investment in the economy.
Bangladesh Bank (BB) will unveil its monetary policy for the second-half (H2) of FY2018-19 at the end of this month. The new policy will be aimed at increasing investments to achieve maximum economic growth, BB sources said.
Bangladesh Bank Governor Fazle Kabir will announce the monetary policy statement (MPS) for January-June of the current fiscal year.
BB officials said they have already held preparatory meetings concerning the monetary policy and formulated a growth-supportive monetary policy, giving top priority to investment through increasing credit flow.
Speaking to the Dhaka Tribune, Bangladesh Bank Executive Director and Spokesman Md Serajul Islam said: “This year, the monetary policy to be unveiled next week will focus on development."
AB Mirza Azizul Islam, a former adviser to the caretaker government, said he does not think there will be any changes in the monetary policy, explaining that it will be similar to the policy formulated in the first-half of FY2018-19.
He said the main problem is that monetary policy is not implemented fully, adding that the monetary policy for July-December of this fiscal year was not properly implemented.
"Currently, private investment is not growing and it needs to be increased. Additionally, there should be a guideline for reducing non-performing loans [NPLs] in the monetary policy," he added.
Former governor of Bangladesh Bank, Salehuddin Ahmed, said although public sector credit growth is increasing, private sector credit growth is not going to grow sufficiently.
"There should be a guideline on how SME entrepreneurs can easily get loans," he said, adding that there should also be proper instructions on stabilizing the foreign exchange market—which is currently facing volatility—by increasing export revenue.
According to central bank data, in the first half of FY2018-19 (July-December), private sector credit growth was estimated to be 16.8%, but stood at 13.2% at the end of December.
Bangladesh Bank officials said banks could not achieve their targets due to a liquidity crisis.
They promised to include a strategy to increase private credit growth and take steps to increase liquidity in the banking sector in the new monetary policy.
